The Rubber Meets the Road

November 20, 2012

Exchanges are the new vehicle for health care reform changes coming down the road, and the on-ramp is coming right up

With elections and this past summer’s SCOTUS decision behind us, the major events that could have altered the macro course of the Patient Protection and Affordable Care Act (PPACA or ACA) are behind us.

The health care providers, insurers and those closely tied to getting health care benefits into the hands of consumers – particularly employers – now face a series of milestones, not all clearly defined, through  Jan 1, 2014 – when 30 million previously uninsured Americans could begin new health care coverage – and beyond.

Just how these different interests– consumers, insurers, providers and the law – converge is where the rubber meets the road.

Circle these dates on your calendar

  • Dec 14, 2012 – States can declare whether they will run their own state health care exchange, let the Feds run it for them or partner with the Feds.
  • 2013 –Medicare payroll tax increases for higher-wage employees. Employee pre-tax contributions to health flexible spending accounts get capped at $2,500.
  • Feb 15, 2013 – States must declare if they would prefer to partner with the Feds
  • March 1, 2013 – Employers must notify employees of exchange-based coverage options
  • Fall 2013 – State and private health benefit exchanges will be operational for people to begin signing up for new Jan 1, 2014 health plan start-dates.
  • 2014 – The mother lode of rules comes online: individual mandate, play-or-pay mandate, premium and cost-sharing subsidies, Medicaid eligibility expanded in some states and additional group health plan mandates.
  • 2016 – Sales of health insurance across state borders permitted if neighboring states agree.
  • 2017 – States can choose to open exchanges to large employers.
  • 2018 – Cadillac tax kicks in.

Pieces of the regulatory puzzle that have to be filled in

  • Just out today – Proposed rules on essential health benefits, guaranteed issue and employment-based wellness programs were published by Health and Human Services.
  • Full-time vs. part-time – More specifics distinguishing full-timers and part-timers will be clarified for the purpose of applying penalties for not offering health benefits.
  • Premium tax credit – How this will be calculated by the IRS.

Stay tuned for a shift in focus in these areas

  • Fix-it – Look for a PPACA-fix bill to be proposed in early 2013. There are some provisions that will need to be adjusted, where costs or incentives don’t necessarily promote the best behaviors.
    • Look for adjustments in how health savings accounts and health reimbursement accounts are capped and taxed.
    • Expect health insurers to be more vocal on the Feds minimizing the health care premium tax and on states taking up ACA’s Medicaid expansion.
    • At issue in the Senate will be the Independent Payment Advisory Board (IPAB) and the medical device tax among other negotiations.
  • Providers take on new gravitas in the cost arena – Accountable care organizations will be going full-steam ahead. Over 80% of the ACOs created to date have been created by hospital and doctor groups, which could signal a shift in control away from the health insurance carriers to providers. The jury is still out on whether ACOs will lower total health care costs, but hospitals are certainly now incented to hold down preventable readmissions and hospital acquired conditions.
  • Entitlement reform – Medicare will continue to evolve according to the plan laid out in the ACA and will be a big part of talks during grand bargain negotiations in 2013. With both sides of the political spectrum far apart on reform, this will be interesting.

Stay tuned for a shift in focus in these areas

As these timeline, rule and structural developments start coming online, there will be a lot to keep track of and many calculations to make. I pay close attention to these and will write on new trends in the health care and insurance space as they break.

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For regular commentary on developments and trends in health care, technology and insurance, follow @brycewatch and @ExtendHealth on Twitter and check out www.extendhealth.com.